* Butter untraded, ratios quoted as high as 2.50 times
* Powder prices vary, no reports of deals
By Lewa Pardomuan
SINGAPORE, Aug 8 Cocoa butter trade came to a
standstill in Asia this week after bean futures spiked to their
highest in three years on speculative buying, turning off demand
from chocolate makers, dealers said on Friday.
London cocoa futures have rallied about 16 percent this year
on expectations demand will outstrip supply in the current
2013/14 crop year. December cocoa ended up 3 pounds at
2,005 pounds a tonne tonne on Thursday, just below Monday's
three-year high of 2,011 pounds.
Butter prices, which have climbed in recent months, stood as
high as $8,400 a tonne, compared with about $6,800 in January.
Butter prices are calculated by multiplying London and New York
bean futures by the ratios, which are set by grinders.
"The high bean prices are affecting grinders. Now, butter
has become so expensive that people have stopped buying, while
powder is not moving at all," said a dealer in Singapore. "So
your processing margin is reduced."
When processed by grinders, cocoa beans yield roughly equal
parts butter, which gives chocolate its melt-in-the-mouth
texture, and powder, which is used in cakes, biscuits and
Butter ratios were mostly quoted at 2.47 to 2.50 times
London futures this week, unchanged from last week. There were
also offers at 2.40 to 2.42 times London.
"Nothing seems to be making sense in cocoa now. London
prices are extremely high. You may want to do combo deals at
ratios of 2.9 times, but still, how to make money?" asked a
dealer in Indonesia.
"Butter ratios are still high in Asia but the question is
whether anybody is really selling?"
In "combo" or combination deals, grinders pair the sales of
butter and powder to prevent a build-up in stocks. Grinders will
then sell butter at a fixed, but smaller, ratio on condition the
buyer also takes some powder.
Dealers said grinders should at least sell butter at ratios
of 3.0 times futures in a combo deal to make some profits.
Soaring cocoa costs ate into Nestle SA's
confectionery profits in the first half of 2014, the company
said on Thursday.
Cocoa bean prices have been on a meteoric rise for the past
year as speculative buying poured into the market. This caused
chocolate makers such as Nestle, Mondelez International
, Mars Chocolate North America and Hershey Co to
raise chocolate prices in recent months.
The powder market in Asia was also deserted. Powder prices
were quoted in a wide range of $1,500 to as high as $2,100,
reflecting thin trade.
(Editing by Biju Dwarakanath)